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An earnings call provides a way for investment analysts to ask probing questions. A prerecorded presentation by the management team provides informative details, but the real fun comes during the live question-and-answer session at the end of every earnings call -- well, every call except Wal-Mart's .

When a company doesn't provide a way for analysts and investors to have an open question and answer session this hurts both the company and the investor. The company lacks an open relationship with its investment community and the investor lacks the ability to listen to the tremor of the CFO's voice when s/he doesn't know the answer to a question.

The importance of earnings callsBefore 2000, earnings calls primarily served large investors and analysts. Journalists and small investors did not receive invitations to the calls which gave some investors more advantage, through selective disclosure, than others. In 2000, the Securities and Exchange Commission required companies to disclose their earnings material to everyone at the same time, which gave everyone the right to participate and listen to the earnings call at the same time.

Wal-Mart is unique. It offers an earnings call, but callers aren't allowed to ask questions on the call. They can ask questions by reaching out to Investor Relations after the call, but they can't ask questions on the call itself. Make no mistake -- this is unusual. Most companies allow an open Q&A session immediately following the call, even if the call is prerecorded.

According to Carol Schumacher, Vice President of Investor Relations at Wal-Mart, investment relations executives at Wal-Mart do take questions from analysts and investors in private phone calls after the recorded call is played. However, this doesn't make up for the benefit of being able to hear the answer to everyone else's questions, or even the questions themselves. There's some value in a candid back-and-forth between shareholders, analysts, and investment professionals. "It's part of the company's history," explained Schumacher in defense. Reverence to the past is nice, but a wall of pre-written summaries just isn't meaningful without an open Q&A.

Ditch the prepared remarksConsultants like McKinsey and Company think CEO's should ditch their prepared text "and allow for more time for thinking. The advantage of such an approach is obvious—questions are better when the data are clear and understood by the participants," the firm says.

Of course the issue with an unprepared question and answer session is stock price. Executives worry that something said on the earnings call will trigger a sell-off, but that concern may be limiting the company.

Family Dollar Stores just had its first quarter earnings call. The earnings report was released a few hours before the call. The stock opened at $61.09, after a previous day's close of 66.34. Then, after reaching a high of $65.33, closed the day out at $64.88 -- that's quite a recovery. Clearly, the market agrees with the "departure" of the President and thinks the management team may have a chance, but the stock only recovered after the call. "What matters is the longer-term value appreciation," McKinsey argues, "not the day-to-day volatility—and in any case, volatility can be avoided if data are presented clearly in the release..."

In Family Dollar's case, the question and answer session allowed analysts and investors to clarify rumors and allay concerns about lower sales and management changes. The CEO was candid and the CFO answered questions with confidence, which may be part of why the stock ended the day at a better price than it was during the call.

There may be risks in full disclosureThe other concern is that Wal-Mart just isn't interested in an open dialogue -- the risks outweigh the benefits. "It is hard to imagine why every company can't disclose data more readily," said the McKinsey report, "unless they're deliberately being obscure or simply unable to measure the data internally. Either possibility should make investors more skeptical about underlying performance." Right on!

News Corp sits on the other end of the spectrum from Wal-Mart. It believes in total disclosure, full transparency, and is one of the only companies that allows reporters to ask questions on the earnings call. So, while Wal-Mart won't allow public questions and answers from anyone, News Corp has opened its doors to some of its most ardent critics.

The Foolish bottom lineAn earnings call is generally an hour long, with 15 to 30 minutes set aside for questions and answers. This common format allows the investor to gain confidence in the management team. Sure, Wal-Mart's annual sales are larger than the GDP of Ireland, but not offering analysts and investors the opportunity to ask questions in an open forum is a missed opportunity to connect with, and attract, investors.